Qualifying for the Home Office Deduction

November 8, 2023

Just because you have a storefront or retail location doesn’t mean that you don’t qualify for the home office deduction. If you have an area in your home that you use exclusively for business, and that you do the administrative work for your business, you might be keeping up with the books, the mail, doing marketing, things like that.

You might qualify for the home office deduction. Let’s break that down a little bit further, an area exclusively used in your home means that it is not a combination area, like a living room couch or a dining room table. It needs to be a separate area that could be walled off, it does not have to be walled off but could be.

So if you have your office in a corner of a bedroom, for example, or in the corner of your living room, you can measure the square footage of that area and use it to qualify for the home office. The home office deduction will then use a percentage based on the square footage of your area or your home office divided by the entire home square footage and we’ll use expenses for operating the home.

Things like utilities, homeowners dues, landscaping, cleaning, repairs. Those expenses then will be multiplied by the percentage of business use of your home. That is one way to calculate. There is also an alternative that will allow you to take $5 per square foot times the area used for business to come to the home office deduction.

For example, if your home office is 10 by 10 feet, that means it’s 100 square feet. If you use the standard allowance of $5 per square foot, that means you have 100 square feet, times $5, or a $500 tax deduction. So take a look at the home office deduction and see if in fact, you do qualify.

If you’d like help with these calculations and other ideas of how to reduce your tax liability, we’re here to help I’m Donna Bordeaux at PYOPAccounting.com

Donna Bordeaux, CPA with PYOPAccounting.com

Creativity and CPAs don’t generally go together.  Most people think of CPAs as nerdy accountants who can’t talk with people.  Well, it’s time to break that stereotype.  Lively, friendly, and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna and Chad Bordeaux.  They have over 50 years of combined experience as entrepreneurial CPAs.  They’ve owned businesses and helped business owners exceed their wildest dreams.   They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.